You Be the Judge

Injured Worker Accused of Hiding Extra Income

An employer terminated an injured worker's benefits when he failed to report proceeds from the sale of a horse.
By: | March 10, 2017 • 3 min read

An employee of A.W. Chesterton suffered a work-related accident while picking up a box of parts. The worker received workers’ compensation benefits, and he was required to fill out monthly questionnaires regarding his income from any business enterprise. The worker indicated that he did not receive any income.

The worker sold a horse for $3,500, and he did not indicate that he earned income on the forms. Chesterton terminated the worker’s benefits, claiming that the sale was part of a business enterprise and that the worker committed fraud when he denied being a part of any business on his forms.

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The worker explained that he had owned horses as a hobby since he was five years old, and he was 76 at the time of trial. He said that he owned as many as 42 horses but decreased that number to seven after his accident.

Chesterton was aware that the worker raised horses while he was employed and after the accident. The worker admitted that he sold a horse but stated that it was part of his hobby of raising horses rather than any business venture. He testified that the horse he sold for $3,500 was purchased for $20,000 19 years before. He stated that prior to that sale, he last sold a horse four years before.

The workers’ compensation judge found that Chesterton failed to carry its burden of proof to establish fraud and awarded the worker supplemental earnings benefits, penalties, and attorney’s fees. Chesterton appealed.

Did the WCJ err when it determined that the employer failed to establish fraud?

  • A. No. The worker did not willfully make false statements for the purpose of obtaining workers’ compensation benefits.
  • B. Yes. The worker was involved in raising and selling horses as a business enterprise.
  • C. Yes. The worker engaged in physical labor while raising horses.

How the Court Ruled

B is incorrect. The court found that the worker was involved in raising horses as a hobby and that the sale of the horse was a sale of a personal asset. Chesterton’s adjustor admitted that had the worker sold personal property at a garage sale, those proceeds would not be material to his workers’ compensation claim.

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C is incorrect. The worker explained that any physical work done such as cleaning stalls and feeding the animals was done out of his desire to have horses as a hobby rather than a means of income.

A is correct. In Johnson v. A.W. Chesterton, et al., No. 16-807 (La. Ct. App. 02/01/17), the Louisiana Court of Appeal held that the worker did not commit fraud when he failed to note the proceeds from the sale of the horse on his forms dealing with income from any business enterprise.

The court stated that the WCJ’s reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed unless manifestly erroneous.

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Here, there was no manifest error in the WCJ’s findings that the worker did not willfully make false statements for the purpose of obtaining workers’ compensation benefits.

The court also found that the WCJ properly awarded penalties and attorney’s fees. The court awarded the worker additional attorney’s fees for work performed on appeal.

Editor’s note: This feature is not intended as instructional material or to replace legal advice.

Christina Lumbreras is a Legal Editor for Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

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